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Don't buy Amazon's argument, California

Editorial

The giant online retailer, which has refused to collect state sales tax for online sales, shouldn't be asking California voters to use their ballots to sustain its business advantage.

July 22, 2011

Any action of the Legislature can be overturned by voter referendum — almost. The state Constitution explicitly exempts tax measures. So how can Amazon.com circulate petitions to overturn ABx1 28, the law that requires online retailers to collect sales taxes on purchases made by California consumers?

Simple: The so-called Amazon-tax law isn't a tax at all. It doesn't impose any new obligation on Californians, who have been required for decades to pay sales taxes on goods purchased from out-of-state sellers. The law that has driven Amazon to such fits governs solely whether the tax gets added to the bill at checkout or, instead, the buyer bears the full legal burden of calculating and remitting the tax. Amazon and other online retailers may claim that it's just too hard and too expensive for them to figure out the different sales taxes levied by each state, but of course what they really don't want to lose is the tax-cheat business model that gives them a bottom-line advantage over their brick-and-mortar counterparts.

The current dust-up has a definite upside: Many California consumers who previously knew nothing about their online sales tax liability can no longer plead ignorance. No thanks to any education campaign from the elected Board of Equalization, which is supposed to collect the so-called use taxes (sales taxes on purchases from out-of-state sellers), in-state buyers should now know that they owe the tax, whether or not the Amazons of the world obey the law and put it on their bills.

Now that buyers are becoming aware of their obligations, Amazon no doubt would like them to view its campaign as part of the tax-revolt tradition. But Proposition 13 lowered property taxes for everyone who owned real estate. The recall of Gov. Gray Davis resulted in lower car taxes for everyone who drives. Amazon's campaign to protect its blame-the-buyer business model is instead the latest in a line of corporate attempts to swindle California voters into boosting their businesses at the expense of others. Take, for instance, last year's Mercury Insurance initiative (Proposition 17), which would have allowed auto insurers to offer some consumers deep discounts — by jacking up rates on drivers new to the market. Or Pacific Gas & Electric's so-called Taxpayers' Right to Vote Act (Proposition 16), to make it harder for public utilities to compete. Or the Alternative Fuels Initiative (Proposition 10), which stood to enrich already rich Texas oilman T. Boone Pickens.

Amazon chose the courts as the forum in which to fight other states' efforts to get online retailers to add sales taxes. That's the right place for a constitutional challenge. In the meantime, it is asking California voters to use their ballots to sustain its business advantage. That's a move that even Californians who have gotten used to (and gotten away with) not paying their taxes on Internet purchases ought to reject.

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